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I gotta problem. I think Tony Blair, at Barcelona, was right to seek less rigidity in European labour markets. And if Silvio Berlusconi supports that approach, I am not dismayed. The unresponsiveness of the EU economy certainly inhibits economic growth in the UK, and it is therefore a legitimate subject of UK political concern. For a number of historical and political reasons, workforce changes are less easy to achieve on the Continent. And Blair is right to argue for greater flexibility.
My own approach to workforce flexibility is far more more radical than Blair's (or I suspect, Berlusconi's). I have already explained by radical proposals for the introduction of Adjustment Pay for all dismissed employees, and I certainly favour workplace consultation along Continental lines. But in lining up "For or Against" workforce reforms throughout the European Union, I am definitely For.
It follows that the UK trade-union leaders have again drawn the wrong line in the sand. They have understandably joined issue with the Labour Government - but on the wrong issue. Their other current error of judgment is to oppose private-public partnerships outright, rather than challenging PPP on a case-by-case basis. My assessment of that earlier misjudgment still holds, see PFI: Misleading Arguments .
This problem arises, as is so often the case, because both sides are partly right. Socialists (whether trade unionists or not) are right to oppose the concept of a "free labour market" - there can be no such thing - indeed, I dislike the very use of market imagery in this context. But equally, Blair and Brown are right to highlight the economic risks of workforce rigidity which inhibits industrial and commercial change. They are certainly right to fear the traditional protectionist approach of European unions, the dogged attempt to "save jobs" in the face of economic change.
The socialist solution lies in developing new forms of dynamic defence against disruptive change. Part of that defence is the systematic extension of lifelong learning, and the creation of training opportunities within the working week. Government intervention is needed to defend all workers against exploitation, not just the trade-union members - after all, three-quarters of the UK workforce are not in any union at all. And while the decline in TU membership has been arrested, there are no signs of any major breakthrough by way of rising recruitment. In the private sector, union membership barely exceeds 10%. Socialists must act to protect the 90% as well.
Socialist legislative measures should therefore be generic, without favouring the trade unions. After all, there is nothing socialist about trade unionism, as the success of American trade unions has testified. Indeed, the emerging generation of young UK trade union leaders have far weaker links with the Labour Party than did their predecessors. And given a strong legal framework of >i>individual rights, I believe that the TU movement would prosper again, as the natural ally of the workforce in the enforcement of those rights.
Society, through Government, should act to reduce the fear of unemployment and consequential proverty, eliminate the indignity of unhygienic and dangerous working conditions, and ensure that terms of employment are sensitive and humane. Those ends should be secured by a strong network of enforceable legal rights, within which each employer has to operate.
But those rights should not inhibit the process of hiring and firing. Job protectionism, espoused by many traditional trade unionists throughout Europe, is undesirable - has indeed been been reduced in the UK . Employers must be free to adjust the size of their workforce quickly, provided that they pay the full price of doing so. The risks and costs of industrial change should not fall on the shoulders of those least able to bear them, namely the rank-and-file employees. Every assistance should by law be assured to redundant workers, both to find alternative work and to survive the change without loss of living standards. Governments should create the individual legal rights - and trade unions should ensure that they are enforced in practice. That is my image of the new socialist settlement.
Nor is there any future in "collective bargaining" for wages - plant bargaining maybe, but that is all. Industry-wide collective bargaining does not figure in my image of the future economy at all. UK unions have broadly accepted that, but the change will come as a severe blow to many traditional French and German unions. That is one of the changes that Blair is right to seek, throughout the European Union.
In any dispute with management, every worker should have the right to choose his own representative, and should not be restricted to a trade union representative or a fellow-worker in the same plant, as UK law currently provides. And Government should provide for a massive extension of official enforcement, by public enforcement agencies. In the building industry, my own industry, the record of the understaffed HSE Inspectorate is woeful, and Labour has not yet done enough to improve the on-site accident statistics. We should not tolerate the low standards of safety which still characterise our construction industry. Other examples of official enforcement agencies are the Commission for Racial Equality, and the Equal Opportunities Commission. And I believe that socialists should continue to argue for the creation of a UK Human Rights Commission, which would also benefit workers.
In short, our systems of worker protection and support need to be re-designed. They need to be dynamic in form, proceeding from the presumption of constant change and helping the individual worker to manage and survive that change. That, in my view, is the way to square the Barcelona circle.
Rigidity is part of the Japanese problem. Japanese society remains traditionalist, inward-looking, conservative, xenophobic and institutionally immobile. And the Japanese economy remains mired in economic weakness, even after ten years of either sluggish economic growth or outright recession. Dismayed at the continuing failure of the world's second economy, other Governments have repeatedly counselled economic stimulation But successive Liberal Democrat Governments have tried to stimulate the economy, without success.
What is going wrong? I have my own theory about Japanese failure, and I hope that you will find time to explore my explanation. It derives from my theory that mankind is, as a normal condition, assaulted by anxieties which threaten to cripple him, inducing severe loss of confidence and inaction - see Multiple Differential Uncertainty. And I believe that the Japanese have lost confidence in their own civic order, in the ability of their Government to solve problems, in the competence of their politicians and administrators. This overall loss of confidence, in a modern consumer economy, erodes consumer confidence - and it is that collective reluctance to consume that is crippling the Japanese economy. The Japanese are so worried, so preoccupied with increasing personal savings as a defence against an uncertain future, that they are deferring consumption, and crippling the economy. That is my view.
Confidence in civic order is a fragile phenomenon. But it is fundamental to the life of contemporary society. And the Japanese have good reason for apprehension about the adequacy of their own social system. Lifelong company employment, a traditional bastion of the social order, is rapidly eroding. Unemployment is running at over 4%, a level never before reached in the post-WW2 period. And Japan has no developed welfare state, so that loss of employment spells personal disaster. The Japanese "enjoy " very low levels of taxation, but they get little or nothing from the State. Health and education remain private services, and state pensions are minimal.
On top of this, Japanese politics are rigid and uninventive. The Liberal Democrats (the Japanese Conservative Party) have been in power in Tokyo for over fifty years, and there has never been any effective Opposition. Factions within the Liberal Democratic Party have fought each other, and the present Prime Minister Koizumi emerged in 2001 in precisely the same way. Bribery, pork-barrel politics, and the personal exploitation of office are endemic to the political system. And it is clear to all that the political and business establishments are deeply intertwined, sharing a common venality. There is a tiny and ineffective Socialist Party, and trade unions are weak. Criminal cadres are openly acknowledged, a kind of socially-acceptable Mafia class. The Japanese Police are a byword for ineffectiveness. Nothing is done to counter the vicious racism and xenophobia which characterise Japanese society. Finally, in addition to all this, the Japanese
doubt the ability of their own public administrators. It was the 1992 Kobe Earthquake which started this erosion of public confidence. "The authorities" demonstrated woeful incompetence in handling the recovery process, which dragged on for years and years. And with the delays, public confidence ebbed away.
All these anxieties are reflected in an astronomically high rate of personal saving. Japanese personal savings are running at 22% of post-tax disposable income - by comparison, the UK rate is now down to 3% (and did not rise above 12%, even in the recession of the early 1990s). The United States savings-rate has dropped to zero, from a historic high of 6%. The anxious save, the confident spend. That is why the Japanese Government has failed in its many attempts throughout the 1990s to stimulate the economy by expanding public works, in true Keynesian manner. Faced with massive Government investment, anxious Japanese consumers have taken the extra wages, and put them straight into their savings accounts. After all, if you have lost confidence, you fear that days could get even rainier.
All this is explicable, in terms of Multiple Differential Uncertainty. When you have time, will you take a look? And let me know what you think.
The Tories have adopted a more sensible two-stage process, requiring the Parliamentary Party to vote first, with the leading candidates then presented to the full Party electorate for final decision. Labour is now agonising over the selection of its candidates for the new elected Mayoralties in local government, and for the next Mayor of London.
I favour the Tory system. Labour should not
continue to give their affiliated trade unions any electoral privileges, within the Party.
TU members have a fast-track to Labour Party membership, and I approve of that. But trade
unionists (of whom I am one, as a GMB member and supporter) should make their political
way simply as members of the Labour Party. On the other hand, I favour giving the professional
politicians a prior right of selection, as the Tories do, selecting two or three
leading candidates, and publishing the result of their vote.
Institutions of Party, Cont'd
I take the view that the governance of society, and the craft of democratic politics, does demand the cultivation of particular skills, and the selection of particular characteristics. Only professional politicians can make a "professional" assessment of their colleagues, and it is unwise to deprive a political Party of their insights. In the recent Tory leadership election, the professionals favoured Kenneth Clarke, while the membership favoured Ian Duncan-Smith. That was understandable, although it is "too early to say" whether the decision was the right one. In London, the Labour GLA Members should first choose two candidates, and then the entire membership of the Greater London Laboaur Party should vote.
As for Party funding, it is no longer avoidable. Charles Clarke, Party Chairman No 2, is consulting widely within the Party. If our politics are not to become wholly suborned by wealth (personal and corporate) we must find new ways of introducing public funds into the process. There should however be no question of allowing the Parties to use public funds for conducting political campaigns, or for recruiting Members. Those processes should remain the subject of voluntary funding, with the tight regulation of all substantial donations.
Strict controls should be put in place to
ensure that the electorate is not bombarded by subsidised campaigning. That would be
deeply unpopular, and would generate a backlash, both against political Parties and
against government itself. But public funding could and should be carefully introduced
into the Parties for the following purposes -
Routine Party administration
Civic and political education, including political publications (though not during Election campaigns)
Additional free postage
Free telephone usage
The dispersal of such funds would require the development of a new form of independent Agency
(not a Parliamentary body, but a statutory Agency, governed by statutory principles) and with enforcement powers.
Over to you, Charles...
The Thatcherite Settlement, I have argued
( Thatcherism Unravels) is crumbling, by the month. And there is no more telling survivor of that Settlement than "the Regulator". Thatcher used Regulators frequently, to manage systems which she could not fully entrust to the market sector, seeking to conceal the true extent of the public interest in their successful operation.
It has long been clear that this form of "regulation", where single "Tsars" try to outmanoeuvre and coerce major private companies, is a busted flush. Indeed, I take the view that the very presence of a Regulator proves that the system in question is not a true market system, but a fudged managed-system.
Don't get me wrong: I favour using self-regulating,
self-balancing market systems wherever they are capable of performing satisfactorily.
Government has quite enough to do, without managing systems that can manage themselves.
But if a "Regulator" is needed, and if that Regulator has to be endowed with substantial
powers of intervention, that is proof positive that the system has been wrongly classified,
and should be treated as a public system, part of the managed sector - and not put in the
market sector at all.
The rail Regulator was powerless to secure the
survival of the rail network. Ofwat has been powerless to prevent the plundering our water companies by foreign companies whose primary interests lie elsewhere, in the US, on the Continent or in Japan. And this week, two new lawsuits were announced, which will come to haunt the Financial Services Authority and its predecessor City regulators. The dispossessed Equitable Life policyholders plan to sue the FSA for a lost £4 billion - "Successive regulators have shown themselves to be toothless and ineffective in their policing of the financial services industry", says the Policyholders Action Group. And creditors of the collapsed Independent Insurance company (which went into liquidation last June) are also planning to sue the FSA.
The truth isthat, like auditors and non-executive
Directors, Regulators are powerless to enter the Secret World of Management. Until there is
root-and-branch reform of company law, bringing the oxygen of publicity to its darkest corners,
these systems will not operate as effective markets. Incompetence and deceit will remain endemic.
The only way ahead is by way of much tighter legal regulation, enforceable directly by the Courts, and with criminal sanctions. "Regulators" are not the answer.
My New Socialist Settlement >> Globalise the Left! >> Special Advisers >> Psst! Wanna volunteer..?